Green claims and greenwashing: a blurred boundary

The Treccani dictionary defines greenwashing as a "communication or marketing strategy pursued by companies, institutions, entities that present their activities as environmentally sustainable, seeking to conceal their negative environmental impact."

We are faced with a plurality of what, according to the Italian Consumer Code, can be framed as 'unfair commercial practices', i.e. untruthful, misleading, inadequately supported or unverifiable statements concerning the characteristics of a product or service, transmitted to the market in order to orientate consumer choices.

The phenomenon was first denounced in 1986 by environmentalist Jay Westerveld, after he read a sign in the bathroom of his hotel in the Fiji Islands suggesting to re-use the used towel, so as to avoid washing - with the associated waste of water and dispersion of detergents. Westerveld pointed out that the focus on the environment did not correspond to a real commitment on the part of the accommodation, but rather to financial gain, as all other activities were in no way marked by green sensitivity.

The discussion on greenwashing has intensified since the 1990s, when two large American chemical-oil companies, Chevron and DuPont, were involved in legal scandals for the serious environmental and human health damage caused by their activities, cleverly disguised to public opinion through misleading communication. It was precisely the DuPont case that caused the most uproar and contributed to the spread of the term. The 2019 film 'Dark Waters', directed by Todd Haynes, focuses on the topic.

More than ten years later, faced with the spread of the phenomenon, the American NGO TerraChoice compiled the now famous 'Seven Sins of Greenwashing', a list of misleading and deceptive green marketing practices, developed with the aim of supporting consumers in their market choices.

The phenomenon of greenwashing significantly pervades the promotional campaigns of several sectors, including the fashion industry: according to a well-known research by the European Commission, 42% of the claims made on the websites of companies in the fashion, cosmetics and household equipment sectors are false or misleading.

Particularly alarming is also the phenomenon of green hushing, i.e. 'green omissions': in these cases, the company communicates its results transparently and does not exaggerate the facts. However, as there is no obligation to disclose sustainability parameters, there is no way of knowing whether the brand is leaving out aspects that are just as, if not more, important than those declared. This is not only the most difficult case to detect but also the most frequent, with one in four companies not publishing data on their science-based-targets. 

Faced with this scenario, consumers find themselves called upon to make 'responsible' purchases without being provided with correct information. Thus, in addition to numerous awareness-raising actions, several tools have been developed to support shoppers, including the greewash.com platform, recently launched by Changing Markets Foundation to shed light on the variety of greenwashing tactics used by companies and to reveal the extent of the problem.

In support of companies, on the other hand, there is UNI EN 14021, a voluntary tool aimed precisely at harmonizing product-related environmental self-declarations, in order to convey correct, demonstrable, truthful and scientifically valid messages.

How to avoid greenwashing? The Italian framework

In Italy, control over the truthfulness and reliability of advertising claims (including environmental claims) is entrusted to the Italian Antitrust Authority. The AGCM has expressed its opinion on several occasions, censuring green claims that integrate the case of unfair commercial practices. With Order No. 28060 of 20 December 2019 - it specified that environmental claims "must report the environmental benefits of the product in a timely and unambiguous manner, be scientifically verifiable and, finally, must be communicated in a correct manner", and that "a correct environmental claim should convey information that is adequately documented, scientifically 'verifiable' and limited to specific verifiable aspects in a comparative key with respect to homogeneous products".

The ascertainment of the unfairness of the commercial practice takes place through an administrative procedure that can be initiated ex officio by the AGCM or upon notification by a consumer, a competitor or any other interested party. Administrative fines ranging from EUR 5,000.00 to EUR 5,000,000 are envisaged, taking into account the gravity and duration of the violation.

The Advertising Self-Discipline Institute also plays a significant role in the national context. In this case, the regulatory reference is represented by the 58th edition of the Self-Regulatory Code of Commercial Communication, published in 2014, which includes an express reference to the abuse of wording referring to environmental protection.

The first ruling by an ordinary judge on the subject of greenwashing is also Italian, with a famous case concerning precisely the textile sector. In November 2021, the Court of Gorizia, in fact, upheld with a precautionary order the urgent appeal filed by Alcantara S.p.A. against its competitor Miko S.r.l., ordering the latter to cease the advertising campaign launched for the launch of the product "Dinamica", since it infringed the principle of fair competition as it contained generic and misleading environmental claims. The text of the order was published for 60 days on the home page of Miko s.r.l.'s website and the news was taken up by many national and international newspapers and magazines, causing serious reputational damage to the company.

The international context

Also outside national borders, institutions are showing increasing attention to the repression of the greenwashing phenomenon, with the initiation of numerous proceedings. Moreover, prescriptions similar to those contained in the Italian legislation can be found in other jurisdictions of EU Member States, given the European matrix of the discipline (Directive 2005/29/EC on unfair commercial practices).

European Union

According to prevailing case law, statements of environmental benefits have been found contrary to Articles 6 and 7 of Directive 2005/29/EC on Unfair Commercial Practices and the national implementing legislation, which:

take the form of vague and general statements without contextualization (e.g. "environmentally friendly", "environmentally friendly", "climate change friendly", etc.);

• are not accompanied by verifiable information about the claimed environmental benefit;
• refer to the whole product rather than to the specific component to which the benefit refers;
• are not accompanied by clear information about the aspects of the product or its life cycle to which they refer;
• give the impression that a product or activity of a professional has no negative impacts or only positive impacts on the environment;
• emphasize a 'non-significant' positive impact while deliberately neglecting others;
• are not accompanied by information that is easily accessible to the user at the time of purchase.

Norway and the Netherlands

Among the most famous cases of the last period is certainly the one brought before the Norwegian Consumer Authority (NCA) on the Higg Index, which led to the development - in concert with the Dutch Consumer and Market Authority (ACM) - of detailed guidelines on the correct use of metrics by companies.

France

To combat the phenomenon of greenwashing ('écoblanchiment'), the Consumer Code, amended in May 2022 by the Climate and Resilience Act, qualifies as a misleading commercial practice the dissemination of false or misleading statements, indications or presentations relating to one or more of the following:

• Article L. 121-2 2nd (b) the essential characteristics of the good or service, namely: its substantial qualities, its composition, its accessories, its origin, in particular as regards the rules justifying the use of the terms "made in France" or "origin France" or any other equivalent term, sign or symbol within the meaning of the Union Customs Code on the non-preferential origin of goods its quantity, method and date of manufacture, its conditions of use and fitness for purpose, its properties and the results expected from its use, in particular its environmental impact, and the results and main features of the tests and checks carried out on the good or service;
• Article L. 121-2 2° e) The extent of the advertiser's commitments, in particular with regard to the environment, nature, process or reason for the sale or provision of the service.

The penalties for greenwashing are particularly severe. Indeed, under Article L. 132-2, misleading business practices are punishable by two years' imprisonment and a fine of up to EUR 300,000.

The amount of the fine may be increased, in proportion to the benefits derived from the offense, up to 10% of the average annual turnover, calculated on the basis of the last three annual turnovers known at the date of the offense, or 50% of the expenses incurred in carrying out the advertising or practice constituting the offense. This percentage is increased to 80% in the case of misleading commercial practices based on environmental claims (sub-paragraphs b and e of Article L. 121-2).

United Kingdom

One year after the launch of the 'Green Claims Code', drawn up by the Competition and Markets Authority (UK CMA), it was found that a quarter of the complaints received concerned the fashion industry. 

The introduction of sanctioning powers for the UK CMA, which will be able to impose fines of up to 10% of the annual turnover of the company guilty of greenwashing, is currently under discussion.

EU and US: regulatory news

Further regulatory revisions are expected to introduce stricter rules.

In the EU, legislation on so-called 'Mandatory Sustainability Labelling' is being drafted, as well as the proposal for the EU Initiative on substantiating green claims. The publication of the latter, planned for the end of 2022, has been postponed to 2023, with no further details on the date.

Furthermore, the European Commission is planning an amendment to the regulation on textile labeling, with the introduction of an obligation to communicate information such as sustainability and circularity parameters, product dimensions and, if applicable, the third country where the manufacturing processes take place ('made in'). This information could be conveyed by means of a digital label (Digital Product Passport).

In the US, the Federal Trade Commission is working on the revision of the Green Guides, also planned by the end of 2022 and strongly urged by the fashion industry.

The support offered by Cikis

In the light of the above, it is clear that compliance with regulatory requirements is an essential basis for proper and virtuous corporate communication. Furthermore, in the face of increasing attention from institutions, it is a good idea to take care to disclose precise and accurate green claims in order to avoid incurring sanction procedures. To this end, the information conveyed outside the company must be carefully verified and validated.

The fundamental principles to be inspired are as follows

• fairness and non deceptiveness: each statement must be formulated in a specific, unambiguous and accurate manner;
• verifiability: each statement must be supported by technical data, based on scientific methods and presented in a clear and comprehensible manner.

Cikis can help companies navigate through national laws and guidelines on green claims, applicable in a selection of countries in Europe, as well as screen and draft claims that comply with the applicable regulations.